The World Bank Development Response to Displacement Impacts Project (DRDIP) in the Horn of Africa (P161067) REPORT NO.: RES47575 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT (DRDIP) IN THE HORN OF AFRICA APPROVED ON APRIL 26, 2017 TO THE NATIONAL TREASURY SOCIAL SUSTAINABILITY AND INCLUSION AFRICA EAST Regional Vice President: Hafez M. H. Ghanem Country Director: Deborah L. Wetzel Regional Director: Mark R. Lundell Practice Manager/Manager: Helene Monika Carlsson Rex Task Team Leader(s): Matthew Stephens, Anna Lisa Schmidt, Samuel Lule Demsash The World Bank Development Response to Displacement Impacts Project (DRDIP) in the Horn of Africa (P161067) I. BASIC DATA Product Information Project ID Financing Instrument P161067 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 26-Apr-2017 29-Apr-2022 Organizations Borrower Responsible Agency State Department for the Development of ASALs, The National Treasury Ministry of Devolution and the Arid and Semi-Arid Lan Project Development Objective (PDO) Original PDO Project Development Objective (from Project Appraisal Document) The Project Development Objective is to improve access to basic social services, expand economic opportunities, and enhance environmental management for communities hosting refugees in the target areas in the Recipient's territory. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60210 26-Apr-2017 29-May-2017 28-Jun-2017 29-Apr-2022 100.00 38.04 67.46 IDA-D1840 26-Apr-2017 23-May-2017 20-Jun-2017 29-Apr-2022 3.00 1.01 2.25 TF-A7762 06-Nov-2018 30-Jan-2019 30-Jan-2019 30-Jun-2021 8.18 7.99 .19 The World Bank Development Response to Displacement Impacts Project (DRDIP) in the Horn of Africa (P161067) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES This Restructuring Paper seeks approval for a ten-month no-cost extension to TFA7762 from June 30, 2021 to April 29, 2022. The Trust Fund is a recipient-executed grant to the Government of Kenya under the Kenya Development Response to Displacement Impacts Project (KDRDIP P161067). This would be the second extension of the TF, taking the cumulative extension period to one year and ten months. The new closing date would align with the closing date of the project's IDA Credit (IDA 60210). Project Background The Kenya Development Response to Displacement Impacts Project (KDRDIP) was approved by the Board on April 26, 2017 and became effective on June 28, 2017. The Project Development Objective (PDO) is to “improve access to basic social services, expand economic opportunities, and enhance environmental management for communities hosting refugees in the targeted areas.” The project comprises four components: (i) Social and Economic Services and Infrastructure; (ii) Sustainable Environmental Management; (iii) Livelihoods Program; and (iv) Project Management and Monitoring and Evaluation. Employing a community-driven development (CDD) approach, subprojects are identified and implemented by beneficiary communities, with support from the local government. DRDIP is a regional operation that is also implemented in Djibouti, Ethiopia and Uganda under P152822. KDRDIP has two sources of financing: (a) an IDA Credit of US$100 million (IDA 60210), with a closing date of April 29, 2022; and (b) a Recipient Executed Trust Fund (TFA7762) of US$8.18 million. TFA7762 is a contribution from the Danish International Development Agency (DANIDA). It was processed as Additional Financing to the project and the Grant Agreement was signed on January 30, 2019. The closing date is June 30, 2021. Project Status After a slow start, the project is now making significant strides. During the last ISM conducted from 14-18 June 2021, progress towards achievement of the Development Objective (DO) and Implementation Progress (IP) was rated as Moderately Satisfactory. This was also the rating in the most recent Implementation and Status Results Report (ISR), dated February 23, 2021. Ratings for Project Management, Monitoring & Evaluation, Financial Management and Procurement have also consistently been Satisfactory or Moderately Satisfactory. Implementation progress was slow in the first two years of implementation but is picking up now. In the 2019-2020 fiscal year, 74 COVID-related subprojects (health, WASH and livelihood) were completed to respond to the impacts of the pandemic. At present, 749 Community sub-projects are being implemented under Component 1. Under Component 2 on Natural Resource Management, the target communities have identified 519 sub-projects that are now under implementation. Additional subprojects under Component 3 on Livelihoods are being implemented by community groups across the five sub-counties targeted by the project. Component three supports a mix of The World Bank Development Response to Displacement Impacts Project (DRDIP) in the Horn of Africa (P161067) traditional/agricultural livelihood (crop production, livestock, agricultural extension, etc.) and non-traditional livelihood (trading, small businesses, agribusiness, etc.). 21,792 beneficiaries have so far benefited under the Livelihoods component and more are set to benefit from the targeted 2500 community groups to be funded in the financial year 2021/2022. After what had been a slow start, the project is now on track to meet targets in the results framework. The DANIDA Additional Financing has contributed to all four components of the project. Proposed Changes As noted above, through the Kenya DRDIP Multi-Donor Trust Fund (MDTF), the Danish International Development Agency (DANIDA) extended additional grant funding of US$8.18 million to the project in 2019. While the Grant Agreement was signed on January 30, 2019 the funds only became accessible to the project from January 2020. Considering the significant amount of the unutilized grant proceeds and to ensure that the grant could support the implementation of community-level sub-projects as planned, an extension of the grant period of 12 months from June 30, 2020 to June 30, 2021 was requested by the Government of Kenya (GoK) and approved by the World Bank. As of June 29, 2021, US$7.99 million of the US$8.18 million has been disbursed. However, during the June 2021 Implementation Support Mission, the government reported that during the project’s transition in 2020 from the Office of the President to the Ministry of Devolution and Arid and Semi-Arid Lands (ASALs), there was a balance in the Grant’s Designated Account of US$1.22 million that had not been included in the budget for 2020-2021 and, therefore, could not be spent. This amount has been included in the budget for 2021-2022, however, an extension of the closing date of TFA7762 is required to allow the government to utilize the remaining balance. Accordingly, this Restructuring Paper seeks approval for a ten-month no-cost extension to TFA7762 from June 30, 2021 to April 29, 2022 (to be consistent with the closing date of the IDA Credit). As noted, this would be the second extension of the TF, taking the cumulative extension period to one year and ten months. The government has assured the World Bank that the remaining balance in the TF will be spent before the new proposed closing date. The government's letter of request is for a 12-month extension, however, we have agreed with the National Project Implementation Unit that ten months would be sufficient. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-60210 Effective 29-Apr-2022 30-Apr-2022 30-Aug-2022 IDA-D1840 Effective 29-Apr-2022 30-Apr-2022 30-Aug-2022 TF-A7762 Effective 30-Jun-2020 30-Jun-2021 30-Apr-2022 30-Aug-2022 The World Bank Development Response to Displacement Impacts Project (DRDIP) in the Horn of Africa (P161067)